Notice2022-14503
Canadian Pacific Railway Limited, Canadian Pacific Railway Company; Soo Line Railroad Company; Central Maine & Quebec Railway US INC.; Dakota, Minnesota & Eastern Railroad Corporation; and Delaware & Hudson Railway Company, Inc.-Control-Kansas City Southern; The Kansas City Southern Railway Company; Gateway Eastern Railway Company; and The Texas Mexican Railway Company
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 7, 2022
Issuing agencies
Surface Transportation Board
Abstract
The Surface Transportation Board (Board) is accepting for consideration the responsive applications filed by Canadian National Railway Company (CNR) and its rail carrier affiliate, Illinois Central Railroad Company (ICRR) (collectively, CN), on February 28, 2022, and amended on June 9, 2022, in Docket Nos. FD 36500 (Sub-No. 1), FD 36500 (Sub-No. 2), FD 36500 (Sub-No. 3), and FD 36500 (Sub-No. 4); and by Norfolk Southern Railway Company (NSR), on February 28, 2022, and amended on June 9, 2022, in Docket No. FD 36500 (Sub-No. 5). The responsive applications relate to the primary application filed October 29, 2021, by Canadian Pacific Railway Limited (Canadian Pacific), Canadian Pacific Railway Company, and their U.S. rail carrier subsidiaries, Soo Line Railroad Company, Central Maine & Quebec Railway US Inc., Dakota, Minnesota & Eastern Railroad Corporation, and Delaware & Hudson Railway Company, Inc. (collectively, CP) and Kansas City Southern and its U.S. rail carrier subsidiaries, The Kansas City Southern Railway Company (KCSR), Gateway Eastern Railway Company, and The Texas Mexican Railway Company (collectively, KCS) (CP and KCS collectively, Applicants).
Full Text
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<title>Federal Register, Volume 87 Issue 129 (Thursday, July 7, 2022)</title>
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[Federal Register Volume 87, Number 129 (Thursday, July 7, 2022)]
[Notices]
[Pages 40576-40578]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-14503]
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SURFACE TRANSPORTATION BOARD
[Docket No. FD 36500]
Canadian Pacific Railway Limited, Canadian Pacific Railway
Company; Soo Line Railroad Company; Central Maine & Quebec Railway US
INC.; Dakota, Minnesota & Eastern Railroad Corporation; and Delaware &
Hudson Railway Company, Inc.--Control--Kansas City Southern; The Kansas
City Southern Railway Company; Gateway Eastern Railway Company; and The
Texas Mexican Railway Company
AGENCY: Surface Transportation Board.
ACTION: Decision No. FD 36500; notice of acceptance of responsive
applications.
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SUMMARY: The Surface Transportation Board (Board) is accepting for
consideration the responsive applications filed by Canadian National
Railway Company (CNR) and its rail carrier affiliate, Illinois Central
Railroad Company (ICRR) (collectively, CN), on February 28, 2022, and
amended on June 9, 2022, in Docket Nos. FD 36500 (Sub-No. 1), FD 36500
(Sub-No. 2), FD 36500 (Sub-No. 3), and FD 36500 (Sub-No. 4); and by
Norfolk Southern Railway Company (NSR), on February 28, 2022, and
amended on June 9, 2022, in Docket No. FD 36500 (Sub-No. 5). The
responsive applications relate to the primary application filed October
29, 2021, by Canadian Pacific Railway Limited (Canadian Pacific),
Canadian Pacific Railway Company, and their U.S. rail carrier
subsidiaries, Soo Line Railroad Company, Central Maine & Quebec Railway
US Inc., Dakota, Minnesota & Eastern Railroad Corporation, and Delaware
& Hudson Railway Company, Inc. (collectively, CP) and Kansas City
Southern and its U.S. rail carrier subsidiaries, The Kansas City
Southern Railway Company (KCSR), Gateway Eastern Railway Company, and
The Texas Mexican Railway Company (collectively, KCS) (CP and KCS
collectively, Applicants).
DATES: The effective date of this decision is July 1, 2022. Comments
regarding the responsive filings must be filed with the Board by July
12, 2022. Rebuttal in support of the responsive filings must be filed
with the Board by August 11, 2022. Briefs must be filed with the Board
by September 20, 2022.
ADDRESSES: Any filing submitted in this proceeding must be filed with
the Surface Transportation Board either via e-filing on the Board's
website or in writing addressed to 395 E Street SW, Washington, DC
20423-0001. In addition, one copy of each filing must be sent (and may
be sent by email only if service by email is acceptable to the
recipient) to each of the following: (1) Secretary of Transportation,
1200 New Jersey Avenue SE, Washington, DC 20590; (2) Attorney General
of the United States, c/o Assistant Attorney General, Antitrust
Division, Room 3109, Department of Justice, Washington, DC 20530; (3)
CP's representative, David L. Meyer, Law Office of David L. Meyer, 1105
S Street NW, Washington, DC 20009; (4) KCS's representative, William A.
Mullins, Baker & Miller PLLC, Suite 300, 2401 Pennsylvania Avenue NW,
Washington, DC 20037; (5) any other person designated as a Party of
Record on the service list in the primary Docket No. FD 36500 \1\; and
(6) the administrative law judge assigned in this proceeding, the Hon.
Thomas McCarthy, 1331 Pennsylvania Avenue NW, Washington, DC 20004-
1710, and at <a href="/cdn-cgi/l/email-protection#93f0e7fcfff1f6e1e7d3f5fee0fbe1f0bdf4fce5"><span class="__cf_email__" data-cfemail="6300170c0f0106111723050e100b11004d040c15">[email protected]</span></a> and <a href="/cdn-cgi/l/email-protection#5b2139223e29281b3d3628332938753c342d"><span class="__cf_email__" data-cfemail="bbc1d9c2dec9c8fbddd6c8d3c9d895dcd4cd">[email protected]</span></a>.
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\1\ This decision embraces: Docket No. FD 36500 (Sub-No. 1),
Illinois Central Railroad--Acquisition of a Line of Railroad Between
Kansas City, Mo., & Springfield & East St. Louis, Ill.--Kansas City
Southern Railway; Docket No. FD 36500 (Sub-No. 2), Illinois Central
Railroad--Trackage Rights Between Airline Junction, Mo., &
Grandview, Mo.--Kansas City Southern Railway; Docket No. FD 36500
(Sub-No. 3), Canadian National Railway--Control--Gateway Eastern
Railway; Docket No. FD 36500 (Sub-No. 4), Illinois Central
Railroad--Assignment of KCS Trackage Rights Between Rock Creek
Junction, Mo., & Airline Junction, Mo.--Union Pacific Railroad; and
Docket No. FD 36500 (Sub-No. 5), Norfolk Southern Railway--Trackage
Rights--Kansas City Southern.
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In addition, one copy of all comments filed in these proceedings
must be served on the responsive applicants' representatives: Raymond
A. Atkins, Sidley Austin LLP, 1501 K Street NW, Washington, DC 20005
(representing CN); and Carrie Mahan, Weil, Gotshal & Manges LLP, 2001 M
Street NW, Suite 600, Washington, DC 20036 (representing NSR).
FOR FURTHER INFORMATION CONTACT: Valerie Quinn at (202) 245-0283.
Assistance for the hearing impaired is available through the Federal
Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION: By application filed with the Board on
October 29, 2021, the primary applicants seek approval and
authorization under 49 U.S.C. 11321-26 for a proposed transaction that
involves the acquisition of control by Canadian Pacific, through its
indirect, wholly owned subsidiary Cygnus Merger Sub 2 Corp., of Kansas
City Southern, and through it, of KCSR and its railroad affiliates, and
for the resulting common control by Canadian Pacific of its U.S.
railroad subsidiaries, and KCSR and its railroad affiliates
(Transaction). In Decision No. 11, served November 23, 2021, and
published in the Federal Register on November 26, 2021 (86 FR 67,571),
the Board accepted for consideration the control application
(Application) filed in this docket and established a procedural
schedule for the proceeding. Canadian Pac. Ry.--Control--Kan. City S.,
FD 36500 (STB served Nov. 23, 2021).
CN and NSR filed their respective responsive applications on
February 28, 2022. On March 16, 2022, the Board suspended the
procedural schedule and directed Applicants to address an apparent
inconsistency in certain data they had submitted. Canadian Pac. Ry.--
Control--Kan. City S., FD 36500 et al., slip op. at 3 (STB served Mar.
16, 2022). Thereafter, on April 27, 2022, the Board directed Applicants
to amend their Application to further explain and support the analysis
underlying the Application's Operating Plan, as well as address
technical issues with the workpapers associated with the Operating
Plan. Canadian Pac. Ry.--Control--Kan. City S. (Decision No. 17), FD
36500 et al., slip op. at 5-6 (STB
[[Page 40577]]
served Apr. 27, 2022). Applicants filed an amended Operating Plan,
including amended workpapers, on May 13, 2022, and an errata on May 20,
2022. On June 9, 2022, CN and NSR filed their respective amended
responsive applications.\2\
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\2\ In Decision No. 17, FD 36500 et al., the Board stated that
the procedural schedule would resume upon the filing of amended
comments and responsive applications. Decision No. 17, FD 36500 et
al., slip op. at 7. Pursuant to the revised procedural schedule
served on May 27, 2022, amended comments and responsive applications
were due by June 9, 2022. Canadian Pac. Ry.--Control--Kan. City S.,
FD 36500 et al., slip op. at 3 (STB served May. 27, 2022).
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Responsive Filings: Conditions Requested. In Docket Nos. FD 36500
(Sub-No. 1), FD 36500 (Sub-No. 2), FD 36500 (Sub-No. 3), and FD 36500
(Sub-No. 4), CN seeks, as a condition to any approval of the
Transaction, approval of ICRR's acquisition of KCS's line between
Kansas City, Mo., and Springfield and East St. Louis, Ill.
Specifically, in Docket No. FD 36500 (Sub-No. 1), ICRR seeks approval
for a line sale of KCS's Springfield Line \3\ to ICRR, as a condition
on any merger approval. (CN Amended Responsive Appl. 6-7.) In
connection with the line acquisition, ICRR also seeks acquisition of an
8.33% ownership share of Kansas City Terminal Railway Company (KCT),
which would enable ICRR to operate over KCT-controlled trackage in
Kansas City, and a 50% ownership interest in KCS's International
Freight Gateway terminal (IFG Terminal) south of Kansas City. (Id. at
7.)
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\3\ The Springfield Line consists of the following lines: (1)
the line from milepost 192.4 at Cockrell (Springfield), Ill.,
through milepost 482.0 at Rock Creek Jct. (Kansas City), Mo.
(milepost equation at Murrayville, Ill., where milepost
221.7=milepost 226.7); (2) the line from milepost 68.2 at Roodhouse,
Ill. (milepost 237.2 on the first segment) through milepost 287.2 at
Church (East St. Louis), Ill., including KCS's interest in the Union
Pacific Railroad Company (UP)/KCS Joint Facility between Godfrey,
Ill., and Church (milepost equation at Godfrey where milepost
28.0=milepost 252.1); (3) the Jacksonville Branch from milepost
226.7 at Murrayville to milepost 216.3 at Jacksonville, Ill.; and
(4) KCS's interest as lessor in the Fulton Branch from milepost 0.0
to milepost 3.0 at Mexico, Mo., leased to Ozark Valley Railroad,
Inc. (CN Amended Responsive Appl. 6-7.)
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In Docket No. FD 36500 (Sub-No. 2), ICRR seeks overhead trackage
rights on KCS's Pittsburg Subdivision, between milepost 5.6<plus-minus>
at Airline Junction in Kansas City, and milepost 29.5<plus-minus> near
Grandview, Mo., to reach the IFG Terminal (in which ICRR would acquire
a 50% ownership interest as part of the transaction in Docket No. FD
36500 (Sub-No.1)). (Id. at 7, 22-23.) In Docket No. FD 36500 (Sub-No.
3), CNR and ICRR seek authority to control by acquiring KCS's equity
interest in the Gateway Eastern Railway Company (GWER), a KCS
subsidiary that owns segments of the Springfield Line located in the
East St. Louis terminal area.\4\ (Id. at 7-8.) In Docket No. FD 36500
(Sub-No. 4), ICRR seeks acquisition by assignment of KCS's trackage
rights over UP between Rock Creek Junction and Airline Junction, which
enable KCS (and would enable ICRR) to reach the joint agency at Knoche
Yard and the IFG Terminal from the Springfield Line.\5\ (Id. at 5, 8,
23.) CN states that, to the extent those trackage rights are not
assignable, ICRR requests that the Board override the assignment
provision. (Id. at 8.)
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\4\ CN states that, upon approval of the applications in the
Sub-Nos. 1 and 3 dockets, ICRR will file a notice of intra-corporate
family transaction pursuant to which ICRR will acquire trackage
rights over GWER (i) between GWER's milepost 238.7 at or near Q
Tower and GWER's milepost 236.8 at or near Willows in East St.
Louis, (ii) between GWER's milepost 2.3 at or near Wann in East
Alton, Ill., and GWER's milepost 0.91 at or near Olin Brass in East
Alton, and (iii) from GWER's milepost 265.01 at or near Roxana in
Wood River, Ill., ``to the change in ownership in the track with
Shell Oil Company.'' (CN Amended Responsive Appl. 7-8.)
\5\ Specifically, ICRR seeks the assignment of KCS's trackage
rights agreement with UP relating to the 1.4-mile UP line, between
milepost 276.8 at Rock Creek Junction and approximately milepost
278.2, in the vicinity of Airline Junction in Kansas City, Mo. (CN
Amended Responsive Appl. 23.)
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CN asserts that its responsive application should be classified as
a minor transaction because the proposed divestiture transaction
``clearly will not have any anticompetitive effects.'' \6\ (Id. at 4.)
CN contends that the divestiture would be procompetitive, as no shipper
would lose transportation options, and many customers would gain
transportation options, as ICRR would give CP-KCS haulage access to all
current and future customers on the Springfield Line. (Id.)
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\6\ While CN asserts that its responsive application should be
classified as a minor transaction, it submitted all the information
required for significant transactions in both its original and
amended responsive applications.
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In Docket No. FD 36500 (Sub-No. 5), as a condition to any Board
approval of the proposed Transaction, NSR seeks certain contingent
trackage rights for overhead movement on KCS's line, between the
connection of KCS with the Meridian Speedway,\7\ at Shreveport, La., at
or near milepost V-169.85, and the Wylie Intermodal Terminal, in Wylie,
Tex., at or near milepost T-197.8. (NSR Amended Responsive Appl. 4, 9.)
NSR states that the contingent trackage rights would apply only to
intermodal traffic originating or terminating at the Wylie Intermodal
Terminal. (Id. at 4.) NSR further notes that these trackage rights
would only be exercisable after NSR purchases the Wylie Intermodal
Terminal, pursuant to the terms of the Dallas Terminal Marketing
Agreement,\8\ and in the event of a ``Major Service Standard Failure,''
as defined under the NSR-MSLLC Joint Use Agreement.\9\ (Id. at. 8-9;
see also NSR Amended Comment 46-47.) NSR requests that its responsive
application be treated as a minor transaction under 49 CFR 1180.2(c),
because the contingent trackage rights ``clearly would not have any
anticompetitive effects.'' (NSR Amended Responsive Appl. 5-6.) Rather,
NSR maintains that, in requesting the contingent trackage rights, it
seeks to maintain existing routes that intermodal shippers utilize
today and to mitigate the potential harm that may flow from the primary
Transaction. (Id. at 6.)
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\7\ Meridian Speedway is a line owned by Meridian Speedway, LLC
(MSLLC), connecting Meridian, Miss., and Shreveport, La. NSR states
that KCS and NSR are the sole members of MSLLC.
\8\ NSR states that its option to purchase the Wylie Intermodal
Terminal would become exercisable during a ``Notice Trigger
Period,'' which is assumed to begin in May 2024 pursuant to an
agreement with KCS. (NSR Amended Responsive Appl. 8.) See KCS Notice
of Exemption, Ex. J, Dallas Terminal Marketing Agreement, Jan. 17,
2006, Kan. City S.--Exemption for Transactions Within a Corp. Fam.,
FD 34822.
\9\ See KCS Notice of Exemption, Ex. C, NSR-MSLLC Joint Use
Agreement, Jan. 17, 2006, Kan. City S.--Exemption for Transactions
Within a Corp. Fam., FD 34822. NSR states that the same contingent
trackage rights for the same category of intermodal traffic, subject
to the same service disruption trigger, apply to its traffic on the
Meridian Speedway. (NSR Amended Responsive Appl. 9.)
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On March 22, 2022, CSX Transportation, Inc. (CSXT), filed a motion
to reject NSR's responsive application, asserting that the responsive
application is not a minor transaction and does not address ``the
significant potential competitive harms that would come from extending
NSR's exclusive rights over the Meridian Speedway to NSR's Wylie
Intermodal Traffic, should NSR exercise its option to purchase the
Wylie Intermodal Terminal.'' (CSXT Motion 2.) CSXT also argues that NSR
did not provide all the information required for a minor transaction.
On March 29, 2022, NSR replied, asserting that its responsive
application was properly filed as a minor transaction and that it had
provided all of the information required for a minor transaction. In
its amended responsive application, NSR maintains that its responsive
application is complete and further addresses CSXT's allegations.\10\
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\10\ On June 22, 2022, Bartlett Grain Co., LP, filed a comment
in support of the primary Transaction and urging the Board to reject
CN's application to divest the Springfield Line.
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Responsive Filings Accepted. The Board finds the responsive
applications
[[Page 40578]]
filed by CN and NSR to be in substantial compliance with the
regulations under which they were filed \11\ and finds no basis for
rejecting them.\12\ The Board reserves the right to require
supplemental information, if necessary. The Board further finds that it
is not necessary to designate the proposed transactions as minor or
significant. Although the agency has typically made such a
determination for responsive applications, neither the statute nor the
Board's regulations require that such a determination be made for
responsive applications that are not inconsistent with the primary
application. Section 11325 of title 49, which provides that control
applications be published in the Federal Register with a determination
of whether a merger is major, significant, or minor, (see 49 U.S.C.
11325(a)), does require that inconsistent applications (a type of
responsive application) and applications for inclusion in major mergers
be filed within 90 days of the notice of the primary application, (see
49 U.S.C. 11325(b)(2)), and the applicable merger regulations provide
that responsive applications inconsistent with the primary application
will be classified as major, significant, or minor, (see 49 CFR
1180.4(d)(4)(ii)). But the regulations make no such reference with
regard to responsive applications that are not inconsistent with the
primary application.\13\ Although the Board previously indicated that
it would classify the responsive applications filed in this proceeding
as minor or significant, see Canadian Pac. Ry.--Control--Kan. City S.
(Decision No. 13), FD 36500 et al., slip op. at 3-4 (STB served Feb.
18, 2022), based on the analysis discussed above, we now find that such
a determination is not necessary.\14\ Notice of the responsive
applications will be published in the Federal Register to ensure that
all parties are aware of them.
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\11\ The Board notes that NSR amended its responsive application
to address the criticisms raised by CSXT. As discussed, the Board
finds the amended responsive application to be in substantial
compliance with the applicable regulations.
\12\ Based on the environmental information submitted by CN
regarding its responsive application, it appears that the thresholds
triggering an environmental review under the Board's regulations at
49 CFR 1105.6(b)(4) and 1105.7(e)(5) would be reached or exceeded.
Therefore, the Board's Office of Environmental Analysis (OEA) will
conduct an environmental and historic review of CN's responsive
application that will be separate from, but conducted concurrently
with, OEA's ongoing environmental and historic review of the
Transaction. NSR's responsive application seeking trackage rights is
categorically excluded from environmental and historic review under
49 CFR 1105.6(c)(3) and 1105.8(b)(3).
\13\ This is consistent with another regulatory provision that
appears to recognize that a minor/significant determination will not
be required for every responsive application. See 49 CFR
1180.4(d)(4)(v) (``Each responsive application filed and accepted
(if required) is considered consolidated with the primary
application.'')
\14\ As the Board has previously explained, the definition of
``minor'' and ``significant'' transaction set out in 49 CFR 1180.2
is tied to the substantive approval standard at 49 U.S.C. 11324(d).
See Decision No. 13, FD 36500 et al., slip op. at 3 n.5 (citing R.R.
Consol. Procs.: Definition of, & Requirements Applicable to,
``Significant'' Transactions, 9 I.C.C.2d 1198, 1199 (1993).) But
whether the Board imposes the relief sought in a responsive
application as a condition to this merger between two Class I
railroads turns not on whether the proposed conditions meet the
standard at 49 U.S.C. 11324(d), but on whether they are justified
and should be approved under the Board's conditioning authority at
49 U.S.C. 11324(c). See Decision No. 13, FD 36500 et al., slip op.
at 4 (setting forth the criteria for imposing conditions to remedy
competitive harm of the primary transaction).
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Access to Filings. Under the Board's rules, any document filed with
the Board (including applications, pleadings, etc.) shall be promptly
furnished to interested persons on request, unless subject to a
protective order. 49 CFR 1180.4(a)(3) (2000). The responsive
applications and other filings in this proceeding will be furnished to
interested persons upon request and will also be available on the
Board's website at <a href="http://www.stb.gov">www.stb.gov</a>. In addition, the responsive filings may
be obtained upon request from the responsive applicants'
representatives named above.
Proceedings Consolidated. The responsive filings in Docket Nos. FD
36500 (Sub-No. 1), FD 36500 (Sub-No. 2), FD 36500 (Sub-No. 3), FD 36500
(Sub-No. 4), and FD 36500 (Sub-No. 5) are consolidated for disposition
with the primary application in Docket No. FD 36500.
Comments may be Submitted. Interested persons may participate
formally by submitting written comments regarding any or all of these
responsive filings, subject to the service requirements specified
above. Such comments must be filed with the Board by July 12, 2022.
Comments must include the following: the commenter's position in
support of or in opposition to the transaction proposed in the
responsive filing; any and all evidence, including verified statements,
in support of or in opposition to the proposed transaction; and
specific reasons why approval of the proposed transaction would or
would not be in the public interest.
Requests for Affirmative Relief will not be Accepted. Because the
responsive applications accepted for consideration in this decision
contain proposed conditions to approval of the primary application in
Docket No. FD 36500, the Board will not entertain requests for
affirmative relief with respect to these responsive applications.
Parties may only participate in direct support of or in direct
opposition to these responsive applications as filed.
It is ordered:
1. The responsive applications in Docket Nos. FD 36500 (Sub-No. 1),
FD 36500 (Sub-No. 2), FD 36500 (Sub-No. 3), FD 36500 (Sub-No. 4), and
FD 36500 (Sub-No. 5) are accepted for consideration and are
consolidated for disposition with the primary application in Docket No.
FD 36500.
2. This decision is effective on its service date.
By the Board, Board Members Fuchs, Hedlund, Oberman, Primus, and
Schultz.
Raina White,
Clearance Clerk.
[FR Doc. 2022-14503 Filed 7-6-22; 8:45 am]
BILLING CODE 4915-01-P
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